Campus Progress today joined several student, consumer, and higher education groups sending a letter to Congress to ask that economic stimulus legislation include short term assistance for students, who are facing significant trouble paying for college during the current recession.

So far, the only federal action to soften the blow of the recession on higher education has been to include providers of private student loans in the $700 billion dollar bailout. This action was counter productive, and will help few if any students while propping up high-risk, high-interest loans. You can read more about this here, or click here take action against the private loan bailout.

The letter sent to congress suggested four measures that Congress could include in the next stimulus package that would provide significant short term assistance for students, while investing in the most important asset for America’s economy in the years to come – human capital. Specifically, the groups asked Congress to:

• Raise the maximum Pell Grant to $7,000 for the lowest income students and fully fund it along with the current Pell shortfall. The current maximum Pell Grant of $4,731 covers just 26 percent of the average in-state cost of attendance at a public four-year college. For college-qualified students with the most limited resources, who are far less likely to get through college than their higher income peers, this increase in grant aid would help reduce the need to borrow and encourage enrollment and completion.

• Increase funding for the Federal Work-Study Program by 25 percent. Young workers tend to be hit first and hardest by rising unemployment, and they must compete with more experienced workers for the shrinking pool of part-time jobs that students rely on to make ends meet. Work-study funds help low- and moderate-income students get valuable job experience while working to help pay for college, both during the school year and over the summer. In addition to subsidizing on-campus jobs that help students stay involved in their education, work-study funds can also support students in public service jobs, expanding both employment and available services in their communities.

• Improve access to Parent PLUS loans. The federal student aid system assumes that most parents can and should contribute towards their dependent children’s education, and most parents want to do just that. However, parents who planned to use home equity or market-based college savings are now facing huge losses with few alternative or affordable sources of credit. Federal Parent PLUS loans can cover up to the full cost of attendance with fixed interest rates of 7.9 percent in the Direct Loan program and 8.5 percent in the Federal Family Education Loan (FFEL) program. Currently, colleges get to decide whether or not to make Parent PLUS applicants fill out the long, complicated Free Application for Federal Student Aid (FAFSA). The Education Department could instead provide a simple PLUS application for all parents, and Congress should consider ways to make PLUS loans more affordable for parents who might otherwise have to turn to riskier forms of debt. The Department of Education and colleges must also make sure that students and parents are aware that dependent students whose parents are rejected for a PLUS loan (there is a limited credit test) become eligible for nearly twice as much as other dependent students can borrow in Stafford loans.

• Provide a limited "emergency access" student loan pool for colleges that commit to providing adequate need-based aid. In this economic climate, students who have exhausted all available aid may increasingly be forced to turn to risky private loans or leave school because of lack of funds. These students should have limited access to additional, affordable federal loans. To ensure the responsible use of “emergency access” loans, colleges would have to meet certain criteria and bear at least part of the risk. For example, participation would be limited to colleges that commit to maintaining or increasing the proportion of student need covered by their own grant aid for the next two years.